Canadian flag carrier Air Canada today moved closer to overhauling its cost structure outside a formal restructuring as flight attendants and pilots approved contract extensions and pension funding moratoriums.

Roughly 85% of the 3,000 pilots represented by the Air Canada Pilots Association casts votes on the deals, with about 55% endorsing the agreement. About 63% of the 6,700 fight attendants represented by the Canadian Union of Public Employees (CUPE) approved the labour pacts.

However, a CUPE spokeswoman says the slim approval margins by both groups shows the carrier needs to rebuild trust among its workforce.

In a statement the pilots highlight key elements of the agreement including a 15% equity stake in the carrier and a seat on the airline's board of directors and restrictions on payouts to shareholders.

Overall Air Canada is seeking the 21-month contract extension and a pension moratorium for the same time period. The carrier needs approval from all five of its labour groups and the federal government to adopt an amendment to pension funding rules for the proposed moratorium to take effect.

The remaining holdout is the International Association of Machinists and Aerospace Workers (IAMAW). More than 10,000 maintenance and operational service division rejected the deal by 50% margin earlier this month.

Those workers largely rejected the deal over concerns that 1,400 Air Canada mechanics currently working for Aveos in Montreal could lose their jobs once the contract extension ends. Previously known as Air Canada Technical Services, Air Canada parent ACE Holdings sold a 70% stake in the company in October of 2007.

An IAMAW spokesman explains the major concern is the transfer of those jobs to Aveos subsidiary Aeroman located in El Salvador. ACTS purchased Aeroman in 2007. Although the 1,400 maintenance jobs in question cover widebody maintenance in Montreal, the IAMAW spokesman says there's growing concern over Aveos building a widebody facility in El Salvador.

The union's spokesman also cites concern generated over reports that Aveos "is or is not doing okay" from a financial perspective.

Approximately 700 IAMAW-represented Air Canada financial and clerical division employees supported the contract extension and pension moratorium, and a revote on the proposed agreement is scheduled for 14 July.

Air Canada also needs approval from all its unions for the proposed agreements to secure $600 million in financing to shore-up liquidity to stave off filing for creditor protection for a second time this decade.

Source: Air Transport Intelligence news